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April 14th, 2009
Legislative Alert:  Immediate Action Needed

Bad Faith Bill

The State Legislature is once again debating another insurance "bad faith" bill that benefits Minnesota's trial lawyers at the expense of consumers and small businesses.  At a time when Minnesota small businesses are facing possibly the most perilous economic times of our generation, Minnesota's trial lawyers are supporting legislation that again threatens to raise insurance costs.  YOU NEED TO ACT NOW! 
 
RIGHT NOW:  Our current legal system is governed by the "American Rule", where each side pays for the costs of its own lawyers.  A plaintiff's decision to file a lawsuit or a defendant's decision to defend against a lawsuit includes the knowledge that each will pay for their own lawyers' fees.  This basic fairness is a balancing factor to help control unnecessary lawsuits from being filed and to discourage fighting for or defending against lawsuits where liability is clear.
 
THE PROPOSAL:  Senate File 528 (Bakk, DFL-Cook) would unfairly change the "American Rule" to require insurance companies who defend a case and simply lose to pay additional damages, including unlimited attorney fees and costs, and 7% prejudgment interest.
 
        Unlimited attorneys fees would have a large financial impact on Minnesota businesses, triggering higher insurance costs and making coverage harder to find.
        The proposal only counts against insurers.  If the trial lawyer loses the case, the insurer doesn't get its costs paid.  Trial lawyers have nothing to lose and a lot to gain by filing any lawsuit.   This will only encourage more lawsuits. 
        Insurers will be forced to pay questionable and even potentially fraudulent claims to avoid the risk of unreasonable financial penalties. These claims costs will be reflected in higher premiums for small business.
        S.F. 528 grew out of coverage disputes from a few large complex businesses that have unusual risk reduction schemes.  But, if passed, nearly everybody could face higher insurance costs on most lines of business insurance.
 
WHY WE DON'T NEED THIS PROPOSAL:
 
        There's no standard of conduct for insurers to follow.  Simply losing a suit triggers damages.
        Very few other states have 'One-Way Loser Pays' systems.  We shouldn't be one of them.
        Minnesota already has a new remedy that provides for attorneys fees and awards against insurers who engage in 'Bad Faith' handling of insurance claims.  This law should be allowed to work before we consider any more new laws that risk raising premiums.
        Minnesota's Unfair Claims Settlement Practices Act provides an administrative remedy outside of the court system that avoids the high cost of attorneys fees.
 
Bottom Line:  This proposal will raise the cost of insurance to Minnesota businesses.   Its doubtful that we can kill the entire bill, but taking out attorneys' fees would go a long way to make this unfair proposal better. 
 
Urge your Senator to vote to TAKE OUT ATTORNEYS FEES FROM S.F. 528!
 
 
You can contact your state senator through this web site
 
 
http://www.leg.state.mn.us/

 
 
 

Quick Links
 
Email Dominic Sposeto
MN Dept of Commerce
 
Legislature
 
 
 
 
 
 

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